Kinetic’s new CEO outlines plans to grow the OOH market
The new boss of WPP’s specialist out-of-home agency has explained how he plans to boost the sector’s credentials ahead of moving in on marketing budgets assigned to other media channels.
Alistair MacCallum, who joined Kinetic UK in August after two years as the UK boss of M/SIX, said he also plans to secure more money from existing OOH advertisers as the medium boosts its digital, trading, creative and cross-screen offerings.
“What I have observed in agencies is that there are a lot of clients who are uncomfortable with some of the decisions that have been made around investment,” MacCallum told Mediatel News.
“15 years ago, you would never have been fired for spending in TV. Today I don’t think many marketing people will get fired for spending money in social and programmatic because there is a level of attribution there that they can stand behind – and finance directors generally will support it.”
However, citing evidence from the Brand Gap report, MacCallum said many clients were now questioning the status quo as they witness the fall-out from an over-investment in (online) short term sales strategies at the expense of longer-term brand building, often via traditional broadcast channels.
“I think we’ve gone so far down the rabbit hole in terms of data-driven, hyper personalisation that it’s leading to decisions which aren’t always the right ones.”
Yet MacCallum said he did not wish to see OOH pit one form of marketing against the other as he believes the introduction of digital capabilities into OOH can deliver both within one medium.
“We should be able to compete for budgets from both brand media and, increasingly, activation,” he said, noting that OOH – which is increasingly looking to combine itself with mobile/social – is still “massively underinvested in by clients.”
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The growth of digital out-of-home screens has helped drive weekly digital impacts to 1.1bn across the UK, according to OOH measurement body Route. At its last count in September, Route recorded 45% more digital screens than the same period in 2018 – 11,734 vs 8,088.
The rise means 69% of adults will now see a digital screen each week, meaning it now has wider cover than commercial radio (65%).
The industry is now in the early stages of plugging these screens together to create a programmatic infrastructure, although it faces a number of challenges in doing so.
Meanwhile, figures compiled by PwC show UK OOH revenues saw the total market grow by +9.8% year-on-year from £300 million in Q3 2018 to £330 million in Q3 2019.
Digital out of home saw growth of +17.1% in Q3, comparable to Q2 (+17.2%) and stronger than Q1 2019 (+11%).
Digital’s share of total Q3 revenue was 54%. ‘Classic’ out of home also saw growth in Q3 (+2.4%), slightly up on Q2 (+2.3%).
MacCallum, who was also previously chief executive at M2M and is new to the OOH sector, was speaking with Mediatel News after taking over the role from Stuart Taylor.
Ahead of unveiling his vision for the business, which is due next month, he said there is the opportunity “to grow budgets from other channels or to take money from other channels.”
“We’re starting to see digital out-of-home being able to offer brands a lot of the really smart elements of the digital world – such as targeting, use of data or near real time trading – but, significantly, without some of the stuff that people are increasingly not very comfortable with,” he said.
The sector could also boost growth by exploiting the rise in direct-to-consumer (DTC) brands that “max out performance channels” as they seek rapid scale.
“There’s a huge opportunity in DTC,” he said, citing brands such as Boohoo and Pretty Little Things, who already target youth audiences on the move through OOH, but who also look to mobile and social – which recent evidence shows have natural synergies with the medium.
However, MacCallum said the OOH sector – “which for too long has focused on competing amongst itself” – would need to collaborate better to deliver more proof points to clients as it competes for adspend.
“Much as we would like to take budget out of digital channels and programmatic and display and social, it’s a lot harder than you think, as TV has found. So the challenge is proving the efficacy of OOH.”
MacCallum said better evidence, based on improved data, could help achieve that.
“We need to re-educate and change behaviours within both client and agency structures,” he said. “Budget deployment isn’t easy and we need to have a very, very compelling narrative.”
That should, in part, mean funding an effective trade body, MacCallum said – a point of ongoing concern for the sector after Outsmart had its wings clipped.
“I personally think that it’s also the responsibility of Kinetic, particularly as market leaders, to have more of a voice in the space. And to be having those conversations with clients and the right people within agencies to affect change.
“Out-of-home needs to turn up the volume on its capabilities, because when you list out all the things that it can do now, it’s incredible… but the industry is going through so much change, I’m not sure planners and clients are fully cognisant of where OOH should sit in the media and marketing mix.”
MacCallum said OOH – the last of the traditional mediums to undergo a digital transformation – was now at the right point in a new hype cycle.
“The new digital infrastructure and programmatic capabilities have enabled us to have better conversations with people,” he said. “Now we need to go out and make it clear what the new era of out-of-home actually looks like.”